TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, May 23, 2016

The IRS Scandal, Day 1110

IRS Logo 2USA Today op-ed:  When Leaders Cheat, Followers ... Follow, by Glenn Reynolds (Tennessee):

The trust that underlies a law-abiding society is rotting away thanks to double-dealing in Washington.

The state is “a gang of thieves writ large,” economist Murray Rothbard is said to have remarked. I’ve always viewed that sort of comment with a bit of skepticism. But now I’m beginning to wonder.

I wonder more when I read things like this report from the Washington Examiner: “The CIA's inspector general is claiming it inadvertently destroyed its only copy of a classified, three-volume Senate report on torture, prompting a leading senator to ask for reassurance that it was in fact ‘an accident.’”

Here’s a hint: It very likely wasn’t.

Is that unfair? I mean, it could have been an accident, right? Yeah it could have been. But it wasn’t. Accidents like that just don’t happen — or, when they do, they’re generally not accidents. And it’s right for people who have custody of evidence to know that any convenient “accidents” will give rise to the presumption that they had something pretty awful to hide, and that they hid it.

But, of course, the CIA’s “accident” was only the latest in a long rash of “accidental” losses of incriminating information in this administration. The IRS — whose Tea Party-targeting scandal is now over 1,100 days old without anyone being charged or sent to jail — seems to have a habit of ”accidentally” destroying hard drives containing potentially incriminating evidence. It has done so in spite of court orders, in spite of Congressional inquiries and in spite of pretty much everyone’s belief that these “accidents” were actually the deliberate, illegal destruction of incriminating evidence to protect the guilty.

Then there’s Hillary’s email scandal, in which emails kept on a private unsecure server — presumably to avoid Freedom of Information Act disclosures — were deleted. Now emails from Hillary’s IT guy, who is believed to have set up the server, have gone poof.

“Destroy the evidence, and you’ve got it made,” said an old frozen dinner commercial. But now that appears to be the motto of the United States government.

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May 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, May 22, 2016

The IRS Scandal, Day 1109

IRS Logo 2The Maddow Blog:  Republicans Get Serious About Impeachment, But Not Obama’s, by Steve Benen:

Quick quiz: when was the last time the U.S. Congress actually impeached an appointed executive branch official? It was 1876 – 140 years ago – when the House impeached Ulysses S. Grant’s War Secretary, William Belknap, over corruption allegations.

Nearly a century and a half later, House Republicans appear eager to give Belknap some company. The Washington Post reported yesterday:

Rep. Jason Chaffetz (R-Utah) introduced a resolution on Wednesday to censure IRS Commissioner John Koskinen, raising the stakes in the GOP war against the tax collector days before a hearing on whether to impeach him.

The four-page resolution seeks Koskinen’s resignation or removal by President Obama and calls on the IRS chief to forfeit his federal pension.

Chaffetz, the far-right chairman of the House Oversight Committee, explained in a statement yesterday, “I view censure as a precursor to impeachment.” He added a few weeks ago, “My foremost goal is impeachment and I’m not letting go of it.”

No, of course not. That might be responsible.

By any sane metric, the idea of congressional impeachment against the IRS commissioner is bonkers. House Republicans are apparently still worked up about an IRS “scandal” that doesn’t exist, and though Koskinen wasn’t even at the agency at the time of the alleged wrongdoing, GOP lawmakers want to impeach him because they disapprove of his handling of the imaginary controversy. ...

[G]iven the fact that Koskinen hasn’t actually committed any impeachable offenses, it’s hard not to get the impression that many House Republicans want to impeach someone, anyone, just for the sake of being able to say they impeached someone. ...

I continue to believe much of this is borne of partisan frustration: Republican investigations into Benghazi and other manufactured “scandals,” including the IRS matter itself, have effectively evaporated into nothing. That’s deeply unsatisfying to GOP hardliners, who remain convinced there’s Obama administration wrongdoing lurking right around the corner, even if they can’t see it, find it, prove it, or substantiate it any way.

Unwilling to move on empty handed, impeaching the IRS chief will, if nothing else, make Republican lawmakers feel better about themselves.

But that doesn’t change the fact that this partisan tantrum is indefensible. Koskinen took on the job of improving the IRS out of a sense of duty – the president asked this veteran public official to tackle a thankless task, and Koskinen reluctantly agreed. For his trouble, Republicans want to impeach him, for reasons even they’ve struggled to explain.

It’s ridiculous, even by the low standards of this Congress.

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May 22, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, May 21, 2016

The IRS Scandal, Day 1108

IRS Logo 2Forbes:  IRS Commissioner's Smidgen Of Impeachment, by Robert W. Wood:

The House Judiciary Committee meets May 24, 2016 to consider IRS Commissioner John Koskinen. As Don Corleone said to the Heads of the Five Families, “How did things ever get so far?“ President Obama was less than convincing with his famous “not even a smidgen of corruption” remark about the IRS to Fox News in 2014. There were just some folks down at the IRS who were “confused” about how to implement the law governing tax-exempt groups. “Confused” sounded better than the one about the rogue IRS employees in Cincinnati. 

Now, House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) introduced House Resolution 737 to censure IRS Commissioner Koskinen. The resolution offers Congressional condemnation and disapproval for what it claims is the IRS Commissioner’s pattern of conduct. It says that is inconsistent with the trust and confidence placed in him as an Officer of the United States. The resolution formally censures Mr. Koskinen, urges his resignation or removal, and even requires him to forfeit all rights to his government pension and other federal benefits. ...

This has been a long battle. Indeed, Chairman Chaffetz and 51 members of Congress sent a letter to President Obama in July of 2015 calling for the IRS Commissioner’s removal. On October 27, 2015, Chairman Chaffetz introduced H.J. Res. 494  to begin proceedings to impeach Koskinen. Referred to the House Judiciary Committee, it currently has 69 co-sponsors. The Committee even released a video with a timeline of key events in the IRS targeting scandal.

House Republicans still want action. Some of the anti-IRS movement is arguably due to the seething animosity some Republicans still have over the targeting, and the way the IRS chief handled it. A raft of scandals involving the IRS, poor and even evasive responses to Congress, bungled approaches to security, and a seeming diffidence to the public and concerned legislators have not won the IRS any friends. For Republicans, the IRS Commissioner has been a lightning rod. ...

Despite all the hoopla, Commissioner Koskinen is still probably safe. In the meantime, Republicans have pushed to pass laws slashing IRS power. President Obama has said he will veto bills that cut back on IRS budgets or power. Supporters say that the goal of such laws is to help improve customer service, prevent fraud, and ensure taxpayer dollars are being spent appropriately.

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May 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, May 20, 2016

The IRS Scandal, Day 1107

IRS Logo 2Wall Street Journal:  The IRS’s Ugly Business as Usual: ‘How Much Has Really Changed?’ A Judge Asks. Answer: Not Much. The Scandal Goes On., by Kimberley A. Strassel:

Amid the drama that is today’s presidential race, serious subjects are getting short shrift. No one is happier about this than Barack Obama. And no agency within that president’s administration is more ecstatic than the Internal Revenue Service.

That tax authority’s targeting of conservative nonprofits ranks as one of the worst federal scandals in modern history. It is topped only by the outrage that no one has been held to account. Or perhaps by the news that the targeting continues to this day.

That detail became clear in an extraordinary recent court hearing, in front of a panel of judges for the D.C. Circuit Court of Appeals. The paired cases in the hearing were Linchpins of Liberty v. United States and True the Vote v. Internal Revenue Service. They involve several conservative nonprofits—there are 41 in Linchpin—that were, as they said, rounded up and “branded” by the IRS. The groups are still suffering harm, and they want justice.

A lower-court judge had blithely accepted the IRS’s claim that the targeting had stopped, that applications for nonprofit status had been approved, and that the matter was therefore moot.

The federal judges hearing the appeal, among them David B. Sentelle and Douglas H. Ginsburg, weren’t so easily rolled. In a series of probing questions the judges ascertained that at least two of the groups that are party to the lawsuit have still not received their nonprofit approvals. The judges determined that those two groups are 501(c)(4) social-welfare groups, which are subject to far less scrutiny than 501(c)(3) charities, yet are still being harassed by the IRS five years later. The judges were told that not only are the groups still on ice, but that their actions are still being “monitored” by the federal government.

As one lawyer for the plaintiffs noted, despite the IRS’s claim that it got rid of its infamous targeting lists, there is “absolutely no showing” that the agency has in fact stopped using the underlying “criteria” that originally “identified and targeted for mistreatment based on political views.”

The hearing also showed the degree to which the IRS has doubled down on its outrageous revisionist history, and its excuses. IRS lawyers again claimed that the whole targeting affair came down to bad “training” and bad “guidance.” They blew off a Government Accountability Office report that last year found the IRS still had procedures that would allow it to unfairly select organizations for examinations based on religious or political viewpoint. The lawyers’ argument: We wouldn’t do such a thing. Again. Trust us.

More incredibly, the IRS team claimed that the fault for some of the scandal rests with the conservative groups, for not pushing back hard enough during the targeting. In response to complaints that the groups had been forced to hand over confidential information (information the IRS now refuses to destroy), one agency lawyer retorted: “They didn’t have to give the information to the IRS if they thought it was inappropriate, they could have said so.” Really. ...

An IRS lawyer rolled out the defense used by former agency official Lois Lerner that the targeting was just the unfortunate use of “inappropriate” criteria, but Judge Sentelle reminded the lawyer of the IRS’s vindictiveness. He noted that on one occasion the IRS simply shelved the application of an organization that had sued it. The agency “came to Court not having done anything to eliminate” the problem, he said, so “It’s just hard to find the IRS to be an agency we can trust, isn’t it?”

Judge Sentelle said there is a “pretty good case” that “egregious violations of the Constitution” had been committed, and he dared an IRS lawyer to “stand there with a straight face” and say otherwise. Judge Ginsburg, who spent the hearing catching out the IRS’s conflicting statements, at one point simply asked: “How much has really changed?”

Answer: not much. It was good news, then, that the House Judiciary Committee recently announced it will hold two hearings to examine the conduct of IRS Commissioner John Koskinen in this matter. Donald Trump, as the presumptive GOP nominee, could do worse than to use his megaphone to draw attention to the hearings. The IRS scandal needs to remain a story.Answer: not much. It was good news, then, that the House Judiciary Committee recently announced it will hold two hearings to examine the conduct of IRS Commissioner John Koskinen in this matter. Donald Trump, as the presumptive GOP nominee, could do worse than to use his megaphone to draw attention to the hearings. The IRS scandal needs to remain a story.

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May 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, May 19, 2016

The IRS Scandal, Day 1106

IRS Logo 2H. Res. 737, 114th Cong., 2d Sess.:

RESOLUTION Condemning and censuring John A. Koskinen, the Commissioner of Internal Revenue. 

Whereas the Committee on Oversight and Government Reform issued a subpoena to John A. Koskinen, Commissioner, Internal Revenue Service, on February 14, 2014, which compelled him to produce, among other things, ‘‘all communications sent or received by Lois Lerner, from January 1, 2009, to August 2, 2013.’’;

Whereas on March 4, 2014, Internal Revenue Service employees in Martinsburg, West Virginia, magnetically erased 422 backup tapes, destroying as many as 24,000 of Lois Lerner’s emails responsive to the subpoena;

Whereas Commissioner Koskinen violated a congressional subpoena by failing to locate and preserve relevant records and by losing key pieces of evidence that were in the agency’s possession, and destroyed, on his watch;

Whereas Commissioner Koskinen betrayed the trust and confidence of the American people as an Officer of the United States;

Whereas Commissioner Koskinen failed to live up to the promise he made to the Senate Committee on Finance during his confirmation hearing to: ‘‘Be transparent about any problems we run into; and the public and certainly this committee will know about those problems as soon as we do.’’;

Whereas as early as February 2014, and no later than April 2014, Commissioner Koskinen was aware that a substantial portion of Lois Lerner’s emails were missing and could not be produced to Congress, but did not notify Congress of any problem until June 13, 2014, when he included the information on the fifth page of the third enclosure of a letter to the Senate Committee on Finance;

Whereas Commissioner Koskinen offered under oath a series of false and misleading statements utterly lacking in honesty and integrity;

Whereas on March 26, 2014, Commissioner Koskinen was asked during a hearing before the Committee on Oversight and Government Reform, ‘‘Sir, are you or are you not going to provide this committee all of Lois Lerner’s emails?’’ and he falsely answered, ‘‘Yes, we will do that.’’;

Whereas on June 20, 2014, Commissioner Koskinen testified falsely that ‘‘since the start of this investigation, every email has been preserved. Nothing has been lost. Nothing has been destroyed.’’;

Whereas on June 20, 2014, Commissioner Koskinen testified falsely that the Internal Revenue Service had ‘‘confirmed that backup tapes from 2011 no longer existed because they have been recycled, pursuant to the Internal Revenue Service normal policy’’ and that ‘‘confirmed means that somebody went back and looked and made sure that in fact any backup tapes that had existed had been recycled.’’;

Whereas on June 20, 2014, Commissioner Koskinen testified that the Internal Revenue Service had ‘‘gone to great lengths’’ to retrieve all of Lois Lerner’s emails, but in fact failed to search disaster backup tapes, Lois Lerner’s Blackberry, the email server, backup tapes for the email server, and Lois Lerner’s temporary replacement laptop, which the Treasury Inspector General for Tax Administration subsequently found to contain more than 1,000 of Lerner’s emails;

Whereas Commissioner Koskinen’s false statements delayed and otherwise interfered with congressional investigations into the Internal Revenue Service targeting of Americans based on their political affiliation; and

Whereas the aforementioned conduct of Commissioner Koskinen caused the House of Representatives to lose confidence in his ability to administer and supervise the execution and application of the internal revenue laws: Now, therefore, be it

Resolved, That—  (1) the House of Representatives does hereby 3 censure and condemn John A. Koskinen for a pat-tern of conduct while Commissioner of Internal Revenue that is incompatible with his duties and inconsistent with the trust and confidence placed in him as an officer of the United States; and

(2) it is the sense of the House of Representatives that John A. Koskinen, Commissioner of Internal Revenue, should— (A) immediately resign from office, and if he does not so resign, the President should remove him from office; and (B) be required to forfeit all rights to any annuity for which he is eligible under chapter 83 or chapter 84 of title 5, United States Code.

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May 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Wednesday, May 18, 2016

The IRS Scandal, Day 1105

IRS Logo 2Washington Post, Impeachment Hearings Are Latest Victory in Conservative War on IRS:

The House Judiciary Committee’s decision to hold hearings a week from today on whether to impeach IRS Commissioner John Koskinen is a victory for the chamber’s far-right caucus, still smarting over the agency’s treatment of conservative groups.

Over five years, House Republicans have slashed the IRS budget, passed bills banning employee bonuses and prohibiting employees fired for misconduct from getting rehired. The GOP has vowed to simplify the tax code, pounced on agency management failures and assailed customer service breakdowns caused by the budget cuts.

And last week, anti-IRS lawmakers persuaded previously hesitant House leaders to start the unusual process of removing the tax collector from office.

One of the biggest questions now is whether the 76-year-old tax commissioner will show up for the grilling. IRS officials said Monday they have made no decision on whether Koskinen will accept the Judiciary Committee’s invitation to appear May 24 and at a hearing in June.

Daily Kos, Republicans Move to Impeach Head of Government Agency for First Time Since 1876:

Suppose you hate taxes. And government. You could try to pass bills that cut taxes, scale back government … in short, do the things the extreme right Freedom Caucus says they want. Or you might simply make it impossible for the government to collect taxes by maneuvering to cripple the agency in charge, which is the approach conservatives radicals have actually taken.

The House Judiciary Committee’s decision to hold hearings a week from today on whether to impeach IRS Commissioner John Koskinen is a victory for the chamber’s far-right caucus, still smarting over the agency’s treatment of conservative groups.

The agency’s treatment of conservative groups. Which turned out to be pretty much the agency’s treatment of every sort of group. It was just that so many groups emerged from the tea party chaos, and so many of them blatantly did not know the difference between what was acceptable in a tax-exempt organization and what was not, that a high number of them became regulatory road kill.

But conservatives have never believed they have to play by the rules, and this scandal-that-wasn’t serves as sufficient pretext to carry on the teahad. ...

Oh, but do mark this down as a historic moment. It’s the first time anyone has tried to impeach the head of a government agency since the Grant administration. ... The real purpose of trying to impeach IRS Commissioner John Koskinen is to give the extremists in the GOP a distraction to talk about when they climb on the stage at rallies between now and November. The chances that they would actually remove Koskinen, who is set to leave in 2017 in any case, are somewhere between extremely slim and laughable. But he provides a demon to rail against. And his name isn’t Donald.

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May 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (8)

Tuesday, May 17, 2016

Papers From The 2015 IRS-TPC Research Conference: Improving Tax Administration Through Research-Driven Efficiencies

TPCIRSThe IRS has released the papers from the 2015 IRS-TPC Research Conference: Improving Tax Administration Through Research-Driven Efficiencies:

2015 IRS Research Bulletin

Foreword

1. Innovative Methods for Improving Resource Allocation

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May 17, 2016 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1104

IRS Logo 2Wall Street Journal editorial:  The IRS’s Donor Lists: Congress Should Keep the Names of Donors Out of Tax Returns:

Democratic Attorneys General in California and New York have been trying to get their hands on donor information in the tax returns of nonprofit groups. Their disclosure demands were recently shot down in a California federal court, but the better question may be why the IRS is even collecting the info.

Under the Tax Reform Act of 1969, 501(c) groups are required to file Form 990 Schedule B that lists the sources of donations of more than $5,000 in the previous calendar year. The lists are supposed to remain private, but this is the government we’re talking about. The National Organization for Marriage’s donor list leaked to the Human Rights Campaign in 2012, and the state of California recently posted some 1,400 Schedule Bs on Attorney General Kamala Harris’s public website, though they were quickly taken down.

Sloppy handling of data that includes home addresses threatens donors with potential harassment. In his April order in AFPF v. Harris, the case challenging Ms. Harris’s appeal to see unredacted donor information from nonprofits, federal Judge Manuel Real noted that the disclosures included donors for Planned Parenthood of California. “An investigator for the Attorney General,” Judge Real wrote, “admitted that ‘posting that kind of information publicly could be very damaging to Planned Parenthood.’”

That goes across the political spectrum, which may be why IRS head John Koskinen and Director of Exempt Organizations Tamera Ripperda have said even the IRS is debating whether the information is necessary for tax enforcement.

Meanwhile, Illinois Republican Peter Roskam’s bill to stop the IRS from collecting donor details of tax-exempt groups passed the Ways and Means Committee in late April. Progressive groups, such as Democracy 21 and Public Citizen, say Schedules Bs are important to protect against foreign donations to tax-exempt groups.

But dropping Schedule Bs wouldn’t change the law. There is no ban on foreign contributions to tax-exempt outfits—see the Clinton Foundation—but there is a blanket ban on foreign money being spent to influence U.S. elections. Audits can determine if foreign contributions are being channeled into politics. Lawbreakers trying to skirt election laws aren’t disclosing improper donations on tax returns in any case.

The real progressive interest in donor disclosure is to use the information as a political weapon. Leaked selectively, donor lists suppress the speech of political rivals. Mr. Roskam’s bill is worth moving to the House floor.

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May 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, May 16, 2016

The IRS Scandal, Day 1103

IRS Logo 2Wall Street Journal: Donald Trump’s Amazon Adventure, by Holman W. Jenkins, Jr.:

You might get some argument about exactly how illegal it is for politicians to use their law-enforcement powers to punish their political opponents.

But at least when Nixon sought to, he felt obliged to do so by secret memorandum. As keeper of the enemies list John Dean wrote, “This memorandum addresses the matter of how we can maximize the fact of our incumbency in dealing with persons known to be active in their opposition to our Administration; stated a bit more bluntly—how we can use the available federal machinery to screw our political enemies.”

As it happened, however, the IRS commissioner at the time, Donald Alexander, refused orders to carry out tax audits of the Nixon White House’s political enemies.

Today, nobody, not even his worst critics, expects to find a memo from President Obama instructing Lois Lerner at IRS to stonewall applications from conservative political groups for tax-exempt status.

His critics probably don’t even expect Mr. Obama to have muttered under his breath that such a thing would be desirable. Rather, Ms. Lerner, all on her own, seemingly decided as a loyal Democratic and ideological warrior that it would be a good thing to use her agency to hamper the president’s partisan antagonists. ...

Donald Trump, an innovator in all things, is now in the process of changing the rules in America with his threat to bring legal action against Amazon on antitrust grounds and, if we hear him correctly, on tax grounds as well.

Mr. Trump couldn’t have been clearer about his motivation. He complained about Washington Post reporters calling up and “asking ridiculous questions,” “all false stuff,” apparently related to Mr. Trump’s tax returns, which in defiance of all tradition he has refused to release, as well as Mr. Trump’s real-estate dealings.

Mr. Trump says the Post was purchased as “a toy” by Amazon founder Jeff Bezos (who bought the paper with his personal funds in 2013). Mr. Trump says the paper now is being used to attack Mr. Trump in order to protect Amazon’s alleged tax-dodging practices even though Amazon, after long resistance, has begun in recent years to collect state sales tax.

All this seems to arise because the Post, the dominant newspaper in the nation’s capital, has assigned reporters to investigate the business career of the candidate who champions his credibility to be president by referring to his business career. ...

Mr. Trump knows U.S. political culture well enough to know that gleefully, uninhibitedly threatening to use government’s law-enforcement powers to attack news reporters and political opponents just isn’t done.

Maybe he thinks he can get away with it. Maybe he’s trying to figure out how to disqualify himself for the presidency in a way that wouldn’t embarrass his fans or blow back on the business career that he always imagined he’d be returning to after the Republican convention at the latest. After all, one way to throw an election is to scare off donors (he needs about a billion dollars) by flaunting his inner Nixon.

Or maybe he really does want to be the American caudillo who flings American democratic and legal norms out the window and ushers in a new age of populist authoritarianism.

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May 16, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Sunday, May 15, 2016

The IRS Scandal, Day 1102

IRS Logo 2Erick Erickson, House GOP to Consider Impeaching IRS Commissioner. Trump Complicates Things.:

House Republicans are going to consider impeaching the IRS Commissioner, Commissioner John Koskinen. The IRS is accused of targeting conservative groups for harassment. Likewise, the IRS is accused of dragging its feet on giving non-profit status to conservative groups. Based on an inspector general investigation into the IRS and subsequent congressional hearings, the accusations appear legitimate.

Koskinen, as head of the IRS, has not seemed interested in actually dealing with the IRS’s stalling and apparent cover up as the investigations continued. He deserves to be impeached.

Donald Trump, however, neutralizes the GOP’s talking point on the IRS. Just the other day he threatened Jeff Bezos and Amazon, suggesting Trump would support internet taxation to hurt Amazon, among other things, because of the Washington Post’s investigative reporters looking into Trump.

If the GOP has a candidate who implies or directly suggests he might use the government against his opponents, it will be really hard for them to distinguish what the IRS did from what their own Presidential nominee wants to do.

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May 15, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Saturday, May 14, 2016

The IRS Scandal, Day 1101

IRS Logo 2Press Release, House Judiciary Committee to Examine Misconduct by IRS Commissioner:

The House Judiciary Committee today announced that it will hold two full committee hearings to examine misconduct by the Internal Revenue Service (IRS) Commissioner John Koskinen.

At the first hearing, which will take place on Tuesday, May 24 at 10:00 a.m., members of the House Judiciary Committee will hear from a witness panel presenting the findings of the House Oversight and Government Reform Committee’s investigation of IRS Commissioner Koskinen. The House Judiciary Committee will also invite IRS Commissioner Koskinen to testify. The House Oversight and Government Reform Committee has investigated the targeting of conservative groups for several years and many of the Committee’s members have found that Commissioner Koskinen failed to comply with a congressional subpoena which resulted in destruction of key evidence, made false statements during his sworn congressional testimony, and did not notify Congress that Lois Lerner’s emails were missing.

At the second hearing, which will take place in June, members of the House Judiciary Committee will invite outside experts to comment on the findings presented in the first hearing and whether further congressional action is warranted. Witnesses for both hearings will be announced at a later date.

House Judiciary Committee Chairman Bob Goodlatte (R-Va.) issued the statement below on the Committee’s upcoming hearings:

The fact that officials at the IRS wielded their power to target certain Americans for their political views is both outrageous and contrary to our nation’s values. Our government is supposed to work for all Americans, not for a particular partisan agenda. As a result of the IRS’ targeting, conservative groups were singled out across the nation, resulting in lengthy paperwork requirements, overly burdensome information requests, and lengthy, unwarranted delays in their applications.

Despite repeated congressional efforts to get to the bottom of this matter, Obama Administration officials, including the IRS Commissioner, have consistently undermined the investigation. Over the coming weeks, the House Judiciary Committee will closely examine Commissioner Koskinen’s misconduct and the implications of his actions.

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May 14, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, May 13, 2016

The IRS Scandal, Day 1100

IRS Logo 2National Review, Re: Trump’s Time Bomb:

John Fund’s column today is, no matter what comes in the next few days, the most important column of the week, as it explains why Donald Trump’s weasel-like refusal to release his tax returns is a mortal danger to Republicans and conservatives nationwide — and suggests what should be done about it. John is absolutely right: Republicans, especially delegates, have every right not just to ask for, but to demand, the release of the returns before the convention. With a crew of Lois Lerners running the IRS, those returns surely will leak right after the nomination is made formal.

Mother Jones:  Corrupt IRS Spells Doom For Donald Trump Later This Year, by Kevin Drum:

That's right. The IRS is such a beehive of Democratic Party corruption that Hillary Clinton will have no trouble getting one of her moles to hand over the entire Trump record. Hell, she's probably done it already and is just waiting for the right time to start dribbling out explosive revelations. It's just the kind of things she'd do. Amirite or amirite.

Between left and right, I feel like I'm almost entirely enveloped by bizarre paranoia these days. Can we all just settle down and return to planet Earth for a while?

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May 13, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, May 12, 2016

The 16% Of Americans Earning $100,000+ Pay 80% Of All Federal Income Taxes

Washington Free Beacon, Americans Earning Six Figures or More Pay Nearly 80% of Individual Income Taxes; These Earners Represent Only 16% of Individual Income Tax Filers:

Americans earning six figures or more paid 79.5 percent of the nation’s share in individual income taxes in 2014, according to the latest preliminary data from the Internal Revenue Service.

Americans paid a total of $1,358,093,169,000 to the IRS in individual income taxes in 2014. Americans earning $100,000 or more paid $1,079,392,180,000 to the IRS, or 79.5 percent of the total income tax paid.

While those top earners contributed almost four-fifths of the total amount of individual income taxes, they represented only 16 percent of the total number of individual income tax returns reported to the IRS. ...

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May 12, 2016 in IRS News, Tax | Permalink | Comments (6)

The IRS Scandal, Day 1099

IRS Logo 2Paul C. Barton (Tax Notes), Should Political Nonprofits Disclose More Frequently?:

Not only do many politically active nonprofits operate with dark money from undisclosed donors, but they carry out their work behind another shield, some say: the time lag before having to report their spending to the IRS.

Long before the IRS receives a politically oriented nonprofit's Form 990, "Report of Organization Exempt From Income Tax," the election involved will have come and gone. With easily available extensions, a nonprofit exempt under section 501(c)(4) can have up to 10-1/2 months after the end of its fiscal year before filing its return.

In an ideal world, say advocates of campaign finance reform, there would be more frequent and thorough disclosure of nonprofits' political spending. But, they say, that would require a Republican Congress, one already hostile to policing these groups, to change either the tax code, federal election law, or both. Meanwhile, there are some reports they have to file in a more timely fashion. For instance, they must report to the Federal Election Commission, sometimes in as little as 24 hours, after they pay for an ad that advocates the election or defeat of a candidate for federal office. A 24-hour disclosure rule also applies to some television or radio ads purchased within 30 days of a primary election or 60 days of a general election that mention specific candidates in the context of an issue but don't expressly advocate their election or defeat. These are called "electioneering communications."

Within a two-year federal election cycle, however, there could be spending on issue ads that fall outside those time windows, or on other ads easily construed as political, that are not included under political spending on Form 990. John Pomeranz of Harmon, Curran, Spielberg & Eisenberg LLP gave the example of ads that might feature Republican senators up for reelection this fall and that mention their refusal to consider the nomination of D.C. Circuit Chief Judge Merrick B. Garland to the Supreme Court.

As a result, Form 990 totals can fall far short of telling the whole story, complicating the all-important evaluation of whether nonprofits are spending less than half their budget on politics, the requirement for keeping their exempt status."There are things that almost anyone would acknowledge as having a possible impact on an election that the IRS might well agree are not reportable as political activity on the [Form] 990," Pomeranz told Tax Analysts.

Added Notre Dame law professor Lloyd Hitoshi Mayer: "I agree that the annual tax filing system is a poor fit with the frantic pace of electoral activities. By the time the IRS or the public receives the information, the relevant election is long past."

But Cleta Mitchell of Foley & Lardner LLP, who represents several conservative 501(c)(4) organizations, says the reporting on issue ads is done even if the communications are not election related. "These morons on the left act like" that rule has never been implemented, she said. ...

Mayer said neither the IRS nor Treasury is going to stick its neck out to change the system. "Even if in theory Treasury has the necessary authority, it would be subject to withering criticism from Congress and elsewhere if it tried to unilaterally impose additional filing requirements on politically active exempt organizations," he said.

But it's clear that the current system "makes it very hard for the IRS to identify any improper spending until after the election," said Lawrence M. Noble, general counsel for the Campaign Legal Center. ...

But Ellen Aprill, professor at Loyola Law School, cautions in a new article for the Pittsburgh Tax Review that Congress has so intertwined sections 527 and 501(c)(4) that any stepped-up regulation of the latter is going to require looking at the former [The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation, 13 Pitt. Tax Rev. 43 (2015)]. Many activities that are tax exempt for section 527 groups are limited for noncharitable 501(c)s and forbidden for 501(c)(3)s, she writes, adding, "Reconciling political campaign intervention under current law is fraught and difficult."

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May 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, May 11, 2016

IRS Employee Got Unemployment For 5 Years Before Anyone Noticed

IRS Logo 2The Daily Caller, IRS Employee Got Unemployment For 5 Years Before Anyone Noticed:

A former Internal Revenue Service (IRS) employee collected unemployment benefits for five years before anyone caught her, according to the Department of Justice (DOJ).

Yvonne E. Borders recently pleaded guilty to stealing government funds after collecting $18,550 in unemployment benefits from January 2009 through December 2013, while working for the U.S. Department of Treasury in New York.

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May 11, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1098

IRS Logo 2Politico, Morning Tax:

IT’S TUESDAY, and we’re marking the third anniversary of the IRS’s tea party controversy — or more specifically, the day that Lois Lerner answered a planted question at an American Bar Association conference. (That’s LLAPQABA, for short.). ...

THREE YEARS LATER: We don’t have the space to give a full recap of the full sordid tale since Lerner acknowledged the IRS improperly scrutinized conservative organizations seeking tax-exempt status. (The short version: People on the right believe it was intentional targeting, while those on the left see bureaucratic mistakes.) But Morning Tax did ask Rep. Peter Roskam (R-Ill.), the chairman of the House Ways and Means Oversight Subcommittee, where he thinks matters stand with the IRS three years later.

The takeaways: Roskam said Republicans believe the IRS is still dragging its feet on making key reforms, but made the case that the renewed focus on the agency led to a taxpayer bill of rights and even changes to civil forfeiture rules. “We’ve made significant progress, but nobody’s breathing a sigh of relief.”

The problems with cybersecurity and identity theft have gotten so pronounced, and are affecting so many taxpayers, that Republicans have had to call something of a détente with the IRS — see, for instance, that $290 million funding increase the agency got several months back. “The cyber issue is ripening very quickly, and you don’t get the sense the IRS is on top of it,” Roskam said. “When the IRS wants to do something well, they can.”

IRS Commissioner John Koskinen won’t be getting impeached. “By mid-July, the congressional year will essentially be done,” Roskam said. House Oversight Chairman Jason Chaffetz (R-Utah) has been leading the charge for impeachment but recently signaled that he could accept a censure of Koskinen.

FROM THE OTHER SIDE: Rep. Elijah Cummings of Maryland, the top Democrat at House Oversight, on the anniversary: “House Republican efforts to impeach or censure the IRS commissioner are exercises in partisanship and a total waste of time and money. Nobody who has examined this issue has identified any evidence of political targeting — not the Justice Department, not the Republican Inspector General of the IRS, and not even the Oversight Committee. Republicans have wasted tens of millions of taxpayer dollars chasing false political conspiracy theories.”

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May 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Tuesday, May 10, 2016

The IRS Scandal, Day 1097

IRS Logo 2New York Post editorial, Facebook’s Faked ‘Trending News’ Is a Warning Not to Trust Silicon Valley:

Well, so much for Facebook’s claims to be an honest information broker: Turns out its list of “trending” topics comes with a hefty political bias.

The site Gizmodo on Monday reported what it had heard from some of the “news curators” who actually create the “trending” feed — which only starts with topics flagged by a computer algorithm as to what users are actually posting about.

The exposé reveals one level of bias imposed by management — and another from the peons hired to do the work.

Several curators cited routine nixing of right-of-center topics — news about Mitt Romney, Wisconsin Gov. Scott Walker and even Lois Lerner, the face of the IRS scandal.

Ironic: IRS employees used their power to suppress righty speech, and Facebook then suppressed the fact its users cared about it . . .

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May 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, May 9, 2016

IRS Seeks Grant Applications for Funding for Low Income Taxpayer Clinics, Volunteer Tax Assistance Programs

IRS Logo 2The IRS has announced that it is accepting grant applications for Low Income Taxpayer Clinics (IR-2016-70) and Volunteer Tax Assistance Programs (IR-2016-71) for the 2017 grant cycle (Jan. 1 - Dec. 31, 2017).

Low Income Taxpayer Clinics

Applications will be accepted through June 20, 2016. The LITC program awards matching grants of up to $100,000 per year to qualifying organizations to develop, expand, or maintain a low income taxpayer clinic. 

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May 9, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1096

IRS Logo 2Bloomberg BNA, Americans for Prosperity Shows That Rough and Tumble Issue Activism Could Serve as a Shield for Charities Against Donor Disclosures:

We all know the saying “politics ain’t beanbag” – and the ranks of candidates for high office seem to be living by that adage. But in the last several years we have seen a significantly more confrontational style filter down to the grassroots issue activists behind any number of organizations and causes – threats to boycott stores (see Hobby Lobby Stores) or even entire states (North Carolina and not too long ago Georgia) over laws or stances taken; calls for individuals to be fired from their jobs or otherwise “economically disciplined” for expressing opinions deemed “unacceptable” (such as Brendan Eich’s ouster from Mozilla for donating to the California Proposition 8 campaign after calls from activists or Atlanta Fire Chief Kelvin Cochran’s dismissal for expressing his disapproval of same-sex marriage in a religious book he published); and even instances of physical altercations or harassment (picketing the homes of politicians’ families, or attempting to physically disrupt events or attendees). Now we may see that style of politics become a tool by which charities and other exempt organizations challenge state-level disclosure requirements that would force them to disclose donor information. ...

Americans for Prosperity Foundation (AFP) won just such a challenge when Judge Manuel Real of the U.S. District Court for the Central District of California held California’s requirement for charities to file annually with the Attorney General (AG) their unredacted Form 990 Schedule B (Schedule of Contributors) to be unconstitutional as applied to AFP. Judge Real permanently enjoined the AG from requiring or demanding AFP’s Schedule B information.

The primary basis for the decision was extensive trial evidence of harassment and intimidation that supporters of AFP and those affiliated with it have experienced. Though Judge Real only recounted a few of the incidents established at trial, the details sound like much of the activism that is becoming more prevalent: An IT contractor took to social media to condemn AFP (and suggest that he could easily slit the throat of AFP’s CEO) and was later found in the garage photographing license plates; protestors at an event cut down the tent being used for the function while attendees were still inside; major donors have received numerous death threats and had their business boycotted once their affiliation has become known; the Koch brothers, long-time supporters have been threatened, along with their families, including their grandchildren (who are all still minors). As Judge Real put it in conclusion, “the Court finds that AFP supporters have been subjected to abuses that warrant relief….” ...

In the end, Judge Real’s opinion may work to open the floodgates for other organizations that have been targeted for various forms of harassment or abuse. Several states have either instituted, revived, or proposed requirements that charitable organizations file their Schedule B information with state officials. And while California has been the focal point of challenges, the U.S. District Court for the Southern District of New York has upheld a similar New York requirement against a facial challenge (see Citizens United v. Schneiderman). While the initial failure of those facial challenges may have dampened litigation at first, this new decision will certainly result in additional interest in litigating these disclosure requirements, even if it must be done on an organization-by-organization basis. For now, we can only wait and see what, if anything, the Ninth Circuit does on appeal.

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May 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, May 8, 2016

TIGTA:  IRS Mischaracterizes 88% Of Hobbies As For-Profit Businesses, Allowing Billions In Improper Loss Deductions

TIGTAThe Treasury Inspector General for Tax Administration has released Opportunities Exist to Identify and Examine Individual Taxpayers Who Deduct Potential Hobby Losses to Offset Other Income (2016-30-031):

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its audit report of the Internal Revenue Service’s (IRS) methods of addressing taxpayers who take business tax deductions for activities not engaged in for profit. TIGTA found that the IRS can improve its methods for identifying high-income taxpayers who may be offsetting their income with “hobby losses” from unprofitable business activity.

The tax code allows taxpayers to deduct all ordinary and necessary expenses paid or incurred in carrying on a trade or business. However, in the “hobby loss” provision in the tax code, the IRS generally disallows business tax deductions for activities not engaged in for profit.

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May 8, 2016 in Gov't Reports, IRS News, Tax | Permalink | Comments (10)

The IRS Scandal, Day 1095

IRS Logo 2Linda Beale (Wayne State), IRS Scrutiny of 501(c)(3)s:

As most everybody is aware by now, the IRS has been under considerable strain for a number of years from budget and staff reductions that have left it underfunded, understaffed, and under pressure.  This is part of the right's effort to "shrink the government to a bathtub and drown it."  If the main organization for helping Americans understand their tax obligations is understaffed, it is likely that many people will become irritated with the agency and blame it (and taxes) for all their problems.  If the main organization for enforcing the U.S. tax laws fairly has too few people to audit the most likely scoflaws and too little money to prepare guidance and rulings to make it harder for scofflaws to scoff at the law, then many people will become irritated with the agency and blame it (and taxes) for their problems while many other people (especially the privileged rich) will continue to scoff at the law by overstating their basis when they sell capital assets, hiding assets in tax havens, and just hiring lots of expensive tax attorneys and accountants to come up with schemes for wiggling through the loopholes in the Code to avoid more taxes.

And of course, if the main organization for ensuring that tax-exempt organizations are not abusing their tax exempt status by using "dark money" to allow the domestic elite and foreign powers to influence and control federal elections and legislation, then odds are the rich and elite and foreign powers will wield more and more influence and control over who gets elected and what kind of legislation they pass.  Odds are we will see even more of the kinds of absurd legislation disenfranchising the poor and minorities by making it harder to vote, harder to get a State-issued I.D. card, harder to wait in line for hours at the polls (if you will be fired for not reporting to work), etc.

None of this is any surprise.

None of it is good government.

All of it is supported by the current radicalized uber-right-wing Republican Party hacks that are running many state governments and hold the majority right now in the U.S. Senate and House of Representatives.

As the New York Times editorial board noted, "[c]laiming a 'social welfare' tax exemption has become a tool for powerful political operatives like Karl Rove, the Republican campaign guru.  His Crossroads GPS group, which has 501(c) status, has spent $330 million on ads and candidates since it was created in 2010."  See Editorial,  Dark Money and an I.R.S. Blindfold, New York Times (Apr. 28, 2016).  And of course, with all the ranting about it being a problem to pick a group with "Tea Party" or "Progressive" in their name for closer scrutiny (when any common sense analysis will tell you that such a group is quite likely to be engaged in forbidden lobbying activities), "the IRS has grown ever more gun-shy about enforcement."

So the latest bill wreaking havoc on democracy, put forward by Republican Peter Roskam in the House of Representatives, would eliminate the current law that requires those who donate more than $5000 to a nonprofit to be disclosed to the IRS (though redacted for public versions of organizations' tax forms)..  See, e.g., Richard Rubin, House Republicans Seek to Block IRS Collection of Non-profit Donor Data, Morningstar, Apr. 28, 2016. That means a foreign corporation or a foreign sovereign power could contribute enormous sums to shape the legislative and regulatory regimes in our country, and there would be NO WAY TO POLICE THE PROBLEM. 

Further, it is hard to understand why any donor to a tax-exempt organization should be entitled to anonymity.  The organization is able to avoid paying any taxes on the funds received, and--especially under the current malevolent eye from Congress towards the IRS--the IRS is hamstrung in enforcing the law against political campaigning with 501(c)(3) funds.  What we should do instead of allow complete anonymity and the power plays that encourages is the opposite:  the name of every donor who gives anything more than some de minimis threshold amount to any tax-exempt organization should be publicly available, and the amount given should be publicly available.  After all, if money is "speech", "speech" is supposed to be heard.  Remember the old saying about the tree that fell in the forest and whether there would even be any sound if there were no eardrum available to hear it.  That's certainly the case with speech.  If giving money is a form of speech, than the gift and giver shouldn't be hidden under a bushel but should be broadcast far and wide for anyone who wants to know.

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May 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, May 7, 2016

The IRS Scandal, Day 1094

IRS Logo 2The Daily Signal, Why Donors to Nonprofits Need to Be Protected From the IRS:

Congressional calls for the impeachment of IRS Commissioner John Koskinen are once again making headlines. In an interview with The Daily Signal, Cleta Mitchell, an attorney representing numerous conservative groups targeted by the IRS, explains why Koskinen should never have been appointed in the first place and why current laws need to be changed to protect donors to nonprofit groups from being targeted and audited by the agency.

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May 7, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, May 6, 2016

Coke Bottler's Merger Might Run Afoul Of New Anti-Inversion Rules

CokeBloomberg, Coke Bottler's Merger Might Lose Tax Gain to Inversion Rules, by Lynnley Browning:

When Coca-Cola Enterprises Inc. announced a merger with two overseas counterparts last August, the Atlanta-based bottler of Coke drinks in Western Europe said the deal had nothing to do with cutting its corporate tax bills.

Now, after the U.S. Treasury Department proposed tougher-than-expected regulations designed to prevent firms’ shifting profits offshore last month, the company has a different message.

In an April 11 securities filing, Coca-Cola Enterprises warned that one Treasury proposal, unveiled seven days earlier, could reduce the merger’s anticipated annual savings of as much as $375 million -- though it didn’t specify a new amount. Since the rule targets a tax-cutting technique known as “earnings stripping,” the company’s disclosure shows that tax savings were an important benefit of the merger all along, said Robert Willens, a tax and accounting consultant in New York. ...

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May 6, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1093

IRS Logo 2Linda Sugin (Fordham), Politics, Disclosure, and State Law Solutions for 501(C)(4) Organizations, 91 Chi.-Kent. L. Rev. ___ (2016):

Non-charitable nonprofit organizations are important political players, and they operate with little regulation and behind a veil of anonymity. The customary regulators of these organizations − the IRS and the FEC − are paralyzed by scandal and dysfunction, and have done nothing to address the problem of dark money in politics spawned by the Supreme Court’s 2010 decision in Citizens United v. FEC. This article considers whether state nonprofit law can fill the gap left by federal tax and election regulators. It describes the efforts taken by California and New York to limit the influence of out-of-state anonymous money in state elections, and considers the policies that states might pursue in regulating politicking by nonprofits under their jurisdiction.

This article argues that state nonprofit law regulation could be desirable if states are concerned with either (1) shielding charitable organizations from the taint of political nonprofits, or (2) protecting donors to social welfare organizations from unwittingly underwriting political activity. However, if states are primarily interested in equalizing political power, silencing out-of-state voices, or protecting voters from fraud, then state nonprofit law is a poor regulatory fit. While most demands for dark-money regulation focus on disclosing the identity of nonprofit donors, this article explains that the appropriate regulation depends on the policy that drives it. While it argues that states have legitimate nonprofit-law concerns and could experiment to pave the way for federal regulation, it ultimately concludes that state nonprofit law regulation is unlikely to have the scope or effectiveness necessary to address the problem created by Citizens United.

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May 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, May 5, 2016

The IRS Scandal, Day 1092

IRS Logo 2Kristin E. Hickman (Minnesota), Pursuing a Single Mission (or Something Closer to it) for the IRS, 7 Colum. J. Tax L. ___ (2016):

It is often said that taxes are the lifeblood of government. As the nation’s tax collector, the IRS serves a critical function without which the federal government would cease to function. Yet the IRS is an agency in crisis—mired in scandal, chronically underfunded, overreliant on automation, and failing to provide taxpayers with the support they need to comply with the tax laws and pay their taxes. This Essay argues that a major contributor to the IRS’s woes is Congress’s penchant in recent decades for utilizing the IRS to administer social welfare and regulatory programs that are only tangentially related to the IRS’s traditional revenue raising mission.

This Essay examines the consequences of that choice and calls for reforming the IRS’s organizational structure to segregate the revenue collection function from the biggest and most politically fraught social welfare and regulatory programs that currently fall within the IRS’s jurisdiction. To that end, this Essay suggests giving serious consideration either to spinning off several non-revenue raising programs from IRS oversight or to splitting up the IRS altogether and distributing its many functions among other new or existing agencies.

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May 5, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, May 4, 2016

IRS To Hire 700 New Enforcement Agents

IRS Logo 2Wall Street Journal, IRS to Hire Up to 700 Enforcement Workers:

The Internal Revenue Service is hiring up to 700 employees for tax enforcement in what Commissioner John Koskinen calls the agency’s “first significant enforcement hiring in more than five years.”

In a memo to employees Tuesday, Mr. Koskinen said the IRS found money for the hiring—despite budget constraints—because of retirements, other departures and unspecified “efficiencies.” The first wave of hiring will begin in a few weeks and will be concentrated in the IRS department that monitors small businesses and the self-employed.

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May 4, 2016 in IRS News, Tax | Permalink | Comments (5)

The IRS Scandal, Day 1091

IRS Logo 2Forbes:  Members Of Congress Push To Shut Down IRS Forever, by Kelly Phillips Erb:

Shut down the Internal Revenue Service (IRS).

That’s the recommendation from the Republican Study Committee (RSC) to House Republicans. The proposal to shutter the IRS, together with other policy initiatives, were submitted by RSC Chairman Bill Flores (R-TX) to House Republican task forces for consideration.

As part of its proposal on tax reform, the RSC slammed the IRS, writing:

In its current form, the Internal Revenue Service (IRS) is at best an inefficient behemoth weighing down our economy. At its worst, the IRS has shown a capacity for outright corruption and political targeting.

The proposal went on to claim:

Under the Obama Administration, the IRS has illegally targeted conservatives. It has channeled millions of taxpayer dollars away from taxpayer assistance for employee bonuses. It has allowed taxpayer information to be compromised in a data breach. The IRS has even intentionally leaked confidential taxpayer information. Despite these facts, the president’s budget actually calls for increasing spending on the IRS by $1 billion.

The solution? “[T]he complete elimination of the IRS.” ...

That’s not to say that the news is all good. The IRS has been plagued by scandal. The tax exempt organization scandal, in particular, has left a bad taste in the mouths of many taxpayers. Concerns over security weaknesses and technology failures have made taxpayers understandably wary.

In response, Congress has hammered the federal agency by slashing the budget. In 2015, seven former IRS commissioners signed onto a joint letter to Congress speaking out against further reductions, noting “[o]ver the last fifty years, none of us has ever witnessed anything like what has happened to the IRS appropriations over the last five years and the impact these appropriations reductions are having on our tax system.” That same year, National Taxpayer Advocate Nina E. Olson noted that “the budget environment of the last five years has brought about a devastating erosion of taxpayer service, harming taxpayers individually and collectively.” ...

And interestingly, for all that Congress wants to complain that IRS is spending too much money and has too much power, Congress keeps handing over responsibilities to the agency. Obamacare? Up to IRS to administer. The Foreign Account Tax Compliance Act (called FATCA)? The IRS administers that, too. That new passport law? IRS. Even as Congress decries the agency, they’re the very ones guaranteeing the need for its existence.

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May 4, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, May 3, 2016

The IRS Scandal, Day 1090

IRS Logo 2Reuters, Conservatives in Congress Urge Shutdown of IRS:

It's a U.S. taxpayer's dream: make the Internal Revenue Service go away, and the largest conservative group in Congress is endorsing just that.

The Republican Study Committee, which counts over two-thirds of House of Representatives Republicans as its members, called recently for "the complete elimination of the IRS."

The committee's support for this idea, once confined to the fringes of conservative ideology, suggests it is more widely accepted on Capitol Hill than ever. But many in Washington, including some Republicans, have trouble taking it seriously. ...

It was unclear how House Speaker Paul Ryan would treat the study committee's proposal in drafting a party policy agenda ahead of the Republican convention in Cleveland in July. "The speaker welcomes input from the RSC and all members of our conference," said Ryan spokeswoman AshLee Strong. Ryan has sidestepped calls for abolishing the IRS in the past, while frequently criticizing the agency.

Washington Post editorial, Congress Should Let the IRS Do Its Job, Not Tie Its Hands:

“The beatings will continue until morale improves,” a famously ironic phrase of unknown origin, aptly describes the Republican House approach to the Internal Revenue Service.

The House has passed a series of sniping, counterproductive measures picking on the IRS. One would limit how it spends the user fees it collects. Another would freeze hiring at the understaffed agency until it obtains certification that no one there has major tax debt. The dumbest would mandate that no one at the IRS could get a bonus until customer service improves.

But who is responsible for the decline of customer service at the IRS? House Republicans. The IRS budget is $500 million below its level in 2010 , the year that Republicans won control of the House. It has been forced to shed 17,000 workers. Meanwhile, its responsibilities have increased. More people are filing taxes. The agency has to administer key parts of the Affordable Care Act. Cyberthreats have skyrocketed, including instances of identity theft.

Hollowing out the IRS has been one of the most foolish policies the GOP majority has pursued, as our columnist Catherine Rampell has illustrated. Tax cheats are encouraged and rewarded. Performing fewer audits cost the government $8 billion in 2015. ...

April is synonymous with taxes, so it is little surprise that Republicans chose last month to harry the IRS, among the least-loved parts of government. But the solution to the IRS’s problems is not more punishment, particularly of the sort that is likely to inhibit its ability to hire competent employees. The answer is for lawmakers to give the agency the money it needs to do its job. The country relies on a mostly voluntary system of tax compliance. If respect for and cooperation with that system decline, the government will lose the very revenue Congress expects the IRS to collect — and on which lawmakers’ budgets depend.

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May 3, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, May 2, 2016

The IRS Scandal, Day 1089

IRS Logo 2Breitbart, Judge Denies Kamala Harris Koch Brothers’ Donor List:

A conservative advocacy group backed by the Koch brothers won a First Amendment victory this week denying California Attorney General Kamala Harris access to the names of conservative nonprofit members and contributors.

Harris, the California Attorney General and a Democratic candidate for outgoing Senator Sen. Barbara Boxer’s Senate seat, Harris has been attempting to overturn post-Watergate reforms to the Internal Revenue Code designed to protect confidential federal tax return information by demanding access to the names of contributors to conservative nonprofits.

The Koch Brothers-backed Americans for Prosperity Foundation (AFPF) and two other nonprofits filed lawsuits in the Central District Court in Los Angeles alleging Harris had violated the First Amendment by requiring charities that wanting to solicit contributions from Californians to disclose to the State of California all donors anywhere in the United States listed on the nonprofit’s IRS tax return Schedule B. Ms. Harris was also alleged to have attempted coercion to acquire donors’ names by threatening denial of permits and demanding huge fines for failure to comply. ...

As a result of a long history of racist and political bias, Congress passed a number of laws to ensure all charity donor information on Schedule B is protected as confidential. The federal tax code currently includes a regime of control and monitoring over state attorneys general, when they are granted access to donors’ names for legitimate law enforcement purposes. Violation by state officials is subject to civil and felony penalties.

The conservative nonprofits claimed there was a substantial risk Ms. Harris and/or her staff would leak this confidential data to their ideological opponents and her allies. The nonprofits cited various acts of lawlessness and law-breaking exposed by congressional investigators regarding Lois Lerner’s IRS staff leaking the National Organization for Marriage’s Schedule B donor information of the to their opponents. ...

Despite Harris saying she plans to appeal the court’s ruling, the issue may become moot with the U.S. House of Representative’s Ways and Means Committee passing a bill on April 28 titled Preventing IRS Abuse and Protecting Free Speech Act on a party-line vote, which would eliminate what Republicans dubbed a “superfluous IRS form, known as the Schedule B, which the IRS has used to improperly target tax-exempt organizations.”

Democrats voted against the bill, claiming that the review by the IRS is critical to ensure foreign funds do not covertly enter U.S. election politics.

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May 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, May 1, 2016

How To Win $17M At Backgammon, Until The IRS Intervenes

IRS BackgammonThe Daily Beast, How To Win $17M At Backgammon, Until The IRS Intervenes:

A legendary Irish gambler took a celebrity-obsessed American private equity honcho to the cleaners, winning over $17 million from him in the course of a 72-hour backgammon session.

Had he been Irish, Alec E. Gores, who nurtures friendship with celebrities such as Sylvester Stallone, Tobey Maguire, and Ben Affleck, and was caught up in the Anthony Pellicano wire-tapping scandal after he apparently set the private dick on his wife who was having an affair with his brother, might have known better than to get into a game of chance and skill with JP McManus. ...

McManus is famous for traveling with a portable backgammon set and, sources acquainted with him tell The Daily Beast, has been known to start games with strangers on airplanes in a (usually successful) attempt to win back his airfare.

But when he sat down with Gores, who is worth $2.1 billion, in November 2012 for what has been described as a “serious backgammon match” he walked away with enough to buy not a plane ticket but a private jet—his winnings were a stunning $17.4 million.

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May 1, 2016 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1088

IRS Logo 2CBS News, Koch Brothers Push Forward Efforts To Hide Nonprofit Donors’ Identities:

The billionaire Koch brothers are pushing ahead in their efforts on both the state and federal level to hide the identity of donors to nonprofit groups.

A week after a conservative advocacy group, backed by the Koch brothers, convinced a federal judge in California that it shouldn’t have to reveal the identities of its donors to California officials, a U.S. House panel approved a bill on Thursday that would shield from the Internal Revenue Service from the names of donors to nonprofit organizations.

Critics say review by the IRS is key to ensuring that foreign funds don’t covertly enter U.S. election politics.

On April 21, Americans For Prosperity Foundation, a nonprofit group backed by billionaire brothers David and Charles Koch, claimed victory when a federal judge in California issued a ruling that California Attorney General Kamala Harris did not have a right to know the identities of that group’s donors.

Harris plans to appeal that ruling. ...

Then, on Thursday, a bill titled Preventing IRS Abuse and Protecting Free Speech Act, went to the U.S. House of Representative’s Ways and Means Committee where the committee approved the bill 23-15, with all members of the committee voting along party lines. All those in favor of the legislation were Republican.

The legislation aims to eliminate what the Republican-led Ways and Means Committee dubbed a “superfluous IRS form, known as the Schedule B, that the IRS has used to improperly target tax-exempt organizations.” The legislation would ban the IRS from collecting the identity of nonprofit organizations’ donors.

A letter from Koch Companies Public Sector president Phillip Ellender on Thursday argues in favor of the bill, saying:

The targeting of non-profit organizations by the Internal Revenue Service (IRS) to limit free speech under this Administration is well documented. From the IRS subjecting donors of nonprofit organizations to the gift tax, to the direct targeting of conservative non-profit organizations based solely on their beliefs, this legislation could not be more pertinent. Considering the pair of reports released earlier this year by the Government Accountability Office (GAO), it’s even more pressing. The GAO found serious internal control flaws within the IRS that could allow the agency to continue its targeting of certain Americans for audit ‘based on an organization’s religious, educational, political, or other views.'

Prior to the committee’s Thursday vote, groups critical of the legislation, including the nonprofit organizations Democracy 21, Brennan Center for Justice, Campaign Legal Center, Public Citizen, and the Sunlight Foundation, among others, penned a letter to the members of the House Ways and Means Committee warning that the bill “would open the door wide for secret, unaccountable money from foreign governments, foreign corporations and foreign individuals to be illegally laundered into federal elections through 501(c)(4) groups.”

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May 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, April 30, 2016

The IRS Scandal, Day 1087

IRS Logo 2Washington Post, Inside Republicans’ Backup Plan to Punish the IRS Chief:

Jason Chaffetz, chairman of the House Oversight and Government Reform Committee, has been on a campaign since last October to impeach — literally — the tax collector.

But the Utah Republican has found little appetite among House leaders to call for a hearing, much less a vote to remove John Koskinen as head of the beleaguered Internal Revenue Service. Instead, Chaffetz says he is in conversations with his GOP colleagues about a vote on the lesser but still harsh charge of a censure.

“My foremost goal is impeachment and I’m not letting go of it,” Chaffetz said in an interview. “But if censure is the right precursor while we go through the process of educating our members, I have a [censure] bill drafted and ready to go.”

Chaffetz and his fellow Republicans have a slew of grievances against Koskinen’s management of the tax agency he took over in 2013, and last week the House passed six anti-I.R.S. bills by party-line votes to mark Tax Day.

But the effort to remove Koskinen stems from a scandal that preceded him — the IRS’s treatment of conservative groups applying for tax-exempt status. And since his five-year term ends in November 2017, the GOP effort to oust him could drag on beyond the Obama presidency.

Chaffetz says Koskinen should be impeached for violating the public trust and lying to Congress as it investigated the IRS’s singling out of conservative groups for scrutiny. The congressman has accused the commissioner of erasing back-up computer files containing thousands of e-mails written by Lois Lerner, the central IRS official in the scandal. Koskinen has told lawmakers his staff turned over all e-mails that were relevant to the investigation, and when some were found to be missing, said they were unrecoverable. ...

A censure resolution, rare in Congress’s modern history and far more common against lawmakers than government officials, would be a formal rebuke that states the House’s lack of confidence in Koskinen and calls on President Obama to fire him. It would fall short of outright impeachment, with no real consequence other than the announcement of the vote itself and a good measure of humiliation.

Democrats dismissed both efforts as wasteful partisanship. “Nobody who has examined this issue has identified any evidence of political targeting — not the Justice Department, not the Republican Inspector General of the IRS, and not even the Oversight Committee,” Rep. Elijah Cummings (D-Md.) the panel’s ranking member, said in a statement. “Republicans have wasted tens of millions of taxpayer dollars chasing false political conspiracy theories.” ...

House Speaker Paul D. Ryan (R-Wis.), when asked about the impeachment effort earlier this month, said “the IRS is not being led well” and “misled Americans” but stopped well short of backing Koskinen’s ouster. “What I think we need to do is win an election … get better people in these agencies and reform the tax code so we’re not harassing the average taxpayer with a tax code they can’t even understand,” Ryan said.

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April 30, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, April 29, 2016

IRS:  The Tax Gap Is $458 Billion

IRS, Tax Gap Estimates for Tax Years 2008–2010:

The gross tax gap is the amount of true tax liability that is not paid voluntarily and timely. The estimated gross tax gap is $458 billion. ... The new estimates suggest that compliance is substantially unchanged since last estimated for TY 2006. Although the TY 2008–2010 gross and net tax gap estimates ($458 billion, $406 billion) are 1.8 percent and 5.5 percent higher, respectively, than the previously released TY 2006 estimates ($450 billion, $385 billion), those increases are driven by improvements in the accuracy and comprehensiveness of the estimates through updates in methods and the inclusion of new tax gap components.

Tax Gap

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April 29, 2016 in IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1086

IRS Logo 2Wall Street Journal, House Republicans Seek to Block IRS Collection of Nonprofit Donor Data:

House Republicans are expanding their assault on the Internal Revenue Service, this time trying to prevent the agency from collecting information about nonprofit groups’ donors.

The latest effort, led by Rep. Peter Roskam (R., Ill.), would change a requirement that nonprofits list all donors who give at least $5,000. That information is supposed to be redacted from the publicly available versions of the groups’ tax forms, but the IRS has inadvertently released donor information about the National Organization for Marriage and a group tied to the Republican Governors Association.

To Mr. Roskam and other Republicans, those failures are a reason to keep clamping down on the agency. “The IRS has demonstrated inability to hold confidential information close, and if it’s not necessary for tax administration, then let’s mitigate this problem and not require organizations to submit it,” he said. The House Ways and Means Committee approved his measure Thursday on a 23-15 party-line vote. ...

The IRS is never popular, but Republicans have been particularly agitated about the tax agency since 2013, when it said it had improperly given extra scrutiny to Tea Party groups seeking tax-exempt status. The agency’s leadership has since changed, but Republicans have maintained pressure and sought to limit its budget. ...

Under Mr. Roskam’s bill, nonprofits would only have to report information tied to certain tax shelters as well as donations from their directors, top employees and officers. The bill would also limit the information available to state charity regulators. A federal court last week ruled that California’s requirement to submit donor names to the state was unconstitutional.

Philip Hackney, a tax law professor at Louisiana State University, said the bill would make it harder for the IRS to police the line between charities and private foundations, the latter being subject to stricter rules. He said it might also be more difficult for the IRS to monitor self-dealing between a charity and its donors. “I think it’s problematic to not collect it, but I do respect the fact that there are some real disclosure issues that have been perennial,” Mr. Hackney said.

New York Times editorial, Dark Money and an I.R.S. Blindfold:

Under the proposal, the I.R.S. would no longer be told the identities of contributors to these nonprofits. Watchdog groups warn in a letter to the House that this would “open the door wide for secret, unaccountable money from foreign governments, foreign corporations and foreign individuals to be illegally laundered into federal elections.” The letter, signed by the Brennan Center for Justice, the Campaign Legal Center, Democracy 21 and five other groups, stressed that the disclosure requirement is one of the few ways of guarding against foreigners influencing American elections.

Representative Peter Roskam, the bill’s sponsor, dismissed the reform groups’ warning, saying the I.R.S. “has a miserable track record when it comes to safeguarding sensitive data” and a history of targeting conservative nonprofits that are critical of administration policies. His office insisted that ending the disclosure requirement would not affect the foreign-donation ban, but the reform groups sensibly ask who else could monitor what has become a runaway system of big-money stealth politicking. ...

Amid fierce Republican criticism, the I.R.S. has grown ever more gun-shy about enforcement, with Tea Party and other right-wing groups accusing tax officials of bias in daring to investigate conservative “social welfare” claims. As I.R.S. wariness grows, so does the attraction of 501(c)s for donors more interested in stealth politicking than charity work. Enabling foreigners to join this dark money debacle would be disastrous.

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April 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, April 28, 2016

The IRS Scandal, Day 1085

IRS Logo 2American Thinker:  IRS Dereliction Aids California AG's Donor Privacy Violations, by Mark J. Fitzgibbons:

California's Democrat attorney general, Kamala Harris, was recently slapped down by a federal judge for violating the First Amendment in a donor privacy case brought by conservative nonprofit Americans for Prosperity Foundation. The Internal Revenue Service needs to shoulder a substantial part of the blame for that case, because the IRS could and should have prevented Harris's lawlessness.

AFPF was granted an injunction against Ms. Harris on April 21 prohibiting her from demanding the nonprofit organization's donor names and addresses listed on confidential federal tax return "Schedule B." At trial, AFPF presented "ample evidence" that its donors received "threats, harassment, intimidation, and retaliation" for their private association with the organization. The right of private association is constitutionally guaranteed as expressed in the 1958 landmark civil rights case NAACP v. Alabama.

General Harris is acquiring confidential Schedule B donor names using a dragnet registration method for charities that communicate with fundraising appeals to Californians. The injunction order noted that Harris's claims for needing Schedule B donor information for law enforcement purposes was not credible, given the lack of an enforcement track record and the availability of such information from other sources on a case-by-case basis.

Judge Manuel Real's order was blunt, noting that "the amount of careless mistakes by the Attorney General's registry is shocking," and "[t]he pervasive, recurring pattern of uncontained Schedule B disclosures [is] irreconcilable with the Attorney General's assurances and contentions as to the confidentiality of Schedule Bs collected by the Registry." ...

What hasn't been reported is how the IRS could have prevented this mess. The federal tax code gives the IRS control over the flow of confidential federal tax return to state officials, who may actually need it to enforce laws. By its own interpretations of the law, the IRS requires states to enter into confidentiality agreements and establish protocols to prevent precisely what California did in accessing and publicly disclosing Schedule Bs.

The IRS's failure to act to protect confidential donor information on Schedule Bs means it may be treated as an "indispensable party" in litigation brought by other charities. Also, Congress should investigate why the IRS was derelict in protecting the confidentiality of donors, and whether Ms. Harris is acting as an Obama IRS surrogate in hampering First Amendment rights of conservative organizations such as AFPF and others.

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April 28, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Wednesday, April 27, 2016

The IRS Scandal, Day 1084

IRS Logo 2Forbes:  Should IRS Pay Employee Bonuses? Recall Lois Lerner's $129,300 On Top Of Salary, by Robert W. Wood:

Should IRS employees receive bonuses, and based on what? The topic is controversial–again–although perhaps not as vitriolic as it was during the Lois Lerner targeting episode. Recall that the face of IRS targeting, Lois Lerner–who took the Fifth and refused to testify about it–received big cash bonuses. So did the fired Acting IRS Commissioner Miller who was also caught up in the targeting scandal. (Yes, it is tempting to ask, ‘bonuses for what?’)

These bonuses were not small pats on the back. In fact, Lois Lerner received $129,300 in bonuses between 2010 and 2013. As head of the IRS tax-exempt division at the  heart of the targeting scandal, she received a 25% bonus each year—averaging $43,000 a year—on top of her regular salary. As you read about bonuses, you might recall other reports saying that 61% of IRS employees caught willfully violating the tax law aren’t fired, but may get promoted. Many of the bonuses can be traced to IRS Commissioner Koskinen, who took the helm of the IRS in December 2013.

His tenure hasn’t been smooth. Most of the IRS bonuses were paid in February and March 2014, with 238 awards totaling $976,387. No further awards were recorded until November and January 2015, with 218 awards totaling $1,000,108. In all, the IRS paid 1,269 bonuses, totaling $5.97 million from January 1, 2010 to February 2, 2015. The average was $4,483, but totals ranged from $250 to $285,688. There is considerable detail on the bonuses here.

And with this kind of track record in the face of scandal, perhaps it is no wonder that there is a House Bill, H.R. 4890, called the IRS Bonuses Tied to Measurable Metrics Act. Sponsored by Rep. Pat Meehan, R-Pa., it would prohibit the IRS from paying bonuses to employees until the Treasury Secretary develops and implements a comprehensive customer service strategy that puts taxpayers first. The House Ways and Means Committee passed four IRS bills recently, and the House voted to approve several. Yet Rep. Sander Levin, D-Mich., the ranking Democrat on the House Ways and Means Committee, objected to tying IRS employee bonuses to the development of a customer service strategy. ...

There are plenty of hard-working and honest employees at the IRS. They do a terribly important job under tough circumstances, and it is usually a thankless job. Maybe they do deserve bonuses. Perhaps there might be agreement on this, especially if they could hang up a big ’Under New Management’ sign.

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April 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Tuesday, April 26, 2016

Prince Died Without A Will, According To Court Documents

PrinceNew York Times, Prince Died Without a Will, According to Court Documents:

Prince died without a will, according to court documents filed by his sister, which may cause complications for his financial estate and musical legacy.

In probate documents filed on Tuesday with the court in Carver County, Minn., Tyka Nelson, 55, Prince’s sister, said that her brother died without a spouse, children or surviving parents, and that “I do not know of the existence of a will.” ...

In addition to Ms. Nelson, the document lists five half-siblings of Prince as interested parties: his half-brothers John Nelson, Alfred Jackson and Omar Baker, and his half-sisters Norrine and Sharon Nelson. According to Minnesota law, surviving half-siblings are treated the same as full siblings. ..

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April 26, 2016 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

Ex-Sprint Heads Blame IRS For Tax Shelter Woes 13 Years Ago

Sprint 3Bloomberg, Ex-Sprint Heads Blame IRS for Tax Shelter Woes 13 Years Ago:

The two top Sprint Corp. executives who were caught up in a tax-shelter scandal in 2003 now blame the Internal Revenue Service for losing their jobs.

Former Chairman and Chief Executive Officer William T. Esrey and Ronald T. LeMay, a former president and chief operating officer, sued the U.S. government Friday over claims they were unfairly forced out of the company after disclosing they were being audited over the use of shelters that deferred taxes from stock option profits. The two men are seeking almost $160 million in combined damages in a complaint filed in Manhattan federal court.

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April 26, 2016 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1083

IRS Logo 2National Review, A Victory for Free Speech — and Democracy:

The Americans for Prosperity Foundation, a conservative-oriented nonprofit, has won a victory in its lawsuit against California attorney general Kamala Harris, who is attempting to do with her investigatory powers what Lois Lerner did with the IRS’s: weaponize them for political purposes.

Wall Street Journal editorial, Free Speech 1, Kamala Harris 0: A Federal Judge Blocks an Attempt to Disclose Conservative Donors:

Kamala Harris has been a hero of the left’s campaign to use donor disclosure as a tool of political intimidation. Since 2013 the California Attorney General has been demanding that nonprofits provide unredacted donor names if they want to solicit donations in the state. On Thursday a federal court declared her disclosure requirement an unconstitutional burden on First Amendment rights.

Federal Judge Manuel Real granted a permanent injunction against Ms. Harris in a lawsuit brought by the Americans For Prosperity Foundation. The group, which is affiliated with free-market supporters Charles and David Koch, has argued that as a 501(c)(3) nonprofit, it should not be forced to supply the Attorney General with the organization’s IRS Form 990 Schedule B, which contains its donor names.

In his 12-page decision, Judge Real notes that while Attorney General Harris argued that she needed donor disclosure to identify lawbreaking like “self-dealing” or “improper loans,” that was a stretch. “[O]ver the course of trial, the Attorney General was hard pressed to find a single witness who could corroborate the necessity of Schedule B forms in conjunction with their office’s investigations,” the judge wrote.

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April 26, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, April 25, 2016

The IRS Scandal, Day 1082

IRS Logo 2Linda Beale (Wayne State), Defending the IRS Against Right-Wing Attacks:

[T]he New York Times on Friday reported on the havoc that the right's attacks on the IRS's budget and its employees' morale has wrought. ...

As certain as death and taxes, tax season political attacks on the I.R.S. go back decades. But in recent years, the intensity has grown and the agency’s funding in turn shrank more than any other time in memory. The campaign gained strength in 2013, when Republicans seized on management failures to allege that I.R.S. employees had singled out conservative groups for greater scrutiny and delays in reviewing their applications for tax-exempt status as “social welfare” organizations, though liberal-leaning groups were examined as well, investigations showed. ...

Clearly, the IRS is a centrally important agency that cannot be eliminated.  We need to collect taxes, and we need an agency with the expertise to advise Congress about tax law and policy as well as to interpret the laws in a way that makes it possible to implement them.  (Congress has a tendency to leave anything really difficult to the IRS to figure out, by authorizing or ordering the Secretary of the Treasury to promulgate regulations carrying out the intent of specific provisions.)  We need to have sufficient IRS staffing to enforce the law through tough audits, especially of the wealthy and corporate enterprises.  We need to have sufficient funding to maintain updated technology--one of the problems with the cuts in funding to the IRS is that the computer systems are more easily hacked than they should be.  That fault lies with Congress, which expects managerial miracles from an agency with constant battering from the right-wing to try to demoralize its employees and constant resource cuts that make budget planning and regular maintenance of systems practically impossible.  When Congress adds additional functions to the agency (whether in the form of additional tax systems to oversee, such as the penalty provisions in the Affordable Care Act,  or additional tax expenditures operating as a subsidy to one or another of Congress's favored groups, such as the section 199 "manufacturing" deduction) but fails to add funding to cover the additional responsibility, it means that the IRS's ability to carry out its task well will be jeopardized, and service to taxpayers will decline. ...

The fact is, the IRS makes money when Congress gives it funding to ensure tax compliance:  as the article states (and many studies support), "the agency collects at least $4 for every $1 it spends for tax compliance."  Former IRS commissioners--during Republican and Democratic administrations--therefore joined together to urge Congress to undo the perverse results of underfunding the IRS.

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April 25, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Sunday, April 24, 2016

The IRS Scandal, Day 1081

IRS Logo 2Patheos:  President Obama Isn’t Interested in Improving the IRS and His Veto Threat Proves It, by Mark Meckler:

President Obama made it abundantly clear this week that he has no interest in improving the integrity of the IRS by promising to veto at least one of four Republican bills aimed at holding the tax giant to the highest standards.

Here is what the president is so opposed to:

  • Executive bonuses curbed until measurable improvements in taxpayer services are proven
  • Banning the hire of persons with tax debt or other tax-related delinquencies
  • Stopping the IRS from rehiring previous employees who were fired for misconduct
  • Curbing the use of fees to fund extra programs

These sensible components that could help revamp a severely broken and biased system are apparently contrary to the big government goals of this administration. The Office of Management issued a Statement of Administration Policy on Monday that outlined the objections to three of the bills they deem as “unnecessary.”

It seems as though the White House — the same one that promised to be the most transparent in history — is more interested in doing things behind closed doors and continue on targeting its political opposition through the IRS vehicle. President Obama continuously asks for sensible legislation from Republicans and when he gets it and sees that it undermines his agenda, he pulls out the veto threat. It’s not hard to see what he’s after and we must continue the fight to resist becoming his targets.

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April 24, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Saturday, April 23, 2016

The IRS Scandal, Day 1080

IRS Logo 2Variety, Hollywood Conservative Organization Friends of Abe to Wind Down Current Structure:

Friends of Abe, the organization launched a decade ago as a fellowship for Hollywood conservatives, told members on Thursday that it would abandon its IRS 501(c)3 status, stop collecting sustaining membership dues and operating its website.

Instead, the organization will become a looser affiliation, although some of its founders denied that they are dissolving completely.

“The situation is we were always designed to be a fellowship and not an activist organization,” said writer-producer Lionel Chetwynd, one of the founders of the group. “But now is the time where everyone wants to do something. The community is aware of us. The town is aware of us. Every trade paper and news outlet is aware of us. We really don’t need to exist as a centrally focused private discreet organization. It is time to open the birdcage and fly.” ...

He said that discussions have been ongoing since last fall over the future of the organization, and costs have been a concern. Its profile has risen as a parade of nationally known GOP and conservative figures have addressed the group, including Cruz and Trump, as well as Supreme Court Justice Antonin Scalia and Paul Ryan. Its members have included Kelsey Grammer, Patricia Heaton and Jon Voight, and Gary Sinise was its chief founder.

The group, which does not endorse or fundraise for candidates, had a high-profile dispute in 2014 with the IRS as it sought to obtain 501(c)3 non profit status, as the IRS expressed concerns over the political nature of its activities. The organization also refused to give the agency access to the portion of its website that included a membership roster, which it protects. The IRS eventually granted the status.

But retaining that status comes with costs, along with the cost of maintaining its website and other administrative expenses, as well as lawyers and accountants. According to IRS disclosure forms, the group took in $284,985 in revenue in 2013, compared with $241,680 in expenses. Sinise stepped away from the group’s leadership several years ago to concentrate on his foundation, which supports military veterans.

Newsmax, Hollywood's Lone Conservative Group Closing Down

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April 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, April 22, 2016

The IRS Scandal, Day 1079

IRS Logo 2New York Times, I.R.S. Fights Back Against House Republicans’ Attacks:

For five years, congressional Republicans have taken out their anti-tax wrath on the Internal Revenue Service, cutting its budget by nearly $1 billion, reducing its staff by about 17,000, and even threatening to impeach its chief.

Now they say no one at the agency receives a bonus until customer service improves. And that measure, which the Republican-controlled House easily passed Thursday, was just one of six anti-I.R.S. measures that it approved this week, mostly by party-line votes, to mark the annual tax-filing deadline.

To supporters of the agency — and there are some — years of such attacks have yielded exactly what Republicans seemed to want: a depleted, defanged tax collector.

“I’m appalled, that’s all I can say,” said Lawrence B. Gibbs, a tax lawyer at Miller & Chevalier who joined the I.R.S. during the Nixon administration and was President Ronald Reagan’s choice for commissioner in 1986. “It’s fine to demonize the I.R.S. It has always been a target. Listen, that goes with the job.”

But, he added, given the nation’s challenges, “the one thing people ought to agree on is that we should have a revenue system that works and works well.”

“And if we’re going to create a disrespect for our tax revenue system,” he continued, “I look at it and say I just don’t think it’s in our country’s best interest.”

House Republicans even gave this week a name, “I.R.S. Week,” though the lines of attack began last week, and were many. In debate, multiple hearings (the I.R.S. commissioner, John Koskinen, testified four times over eight days), news conferences and commentary in the news media, the agency even got the blame for the hated tax code, which Congress writes and Republicans have promised for five years to rewrite and simplify.

“Right now, we have a tax code that no one can understand being enforced by an agency that no one trusts,” said Speaker Paul D. Ryan, Republican of Wisconsin, who was the chairman of the tax-writing Ways and Means Committee before taking the House’s top job last fall.

As certain as death and taxes, tax season political attacks on the I.R.S. go back decades. But in recent years, the intensity has grown and the agency’s funding in turn shrank more than any other time in memory. The campaign gained strength in 2013, when Republicans seized on management failures to allege that I.R.S. employees had singled out conservative groups for greater scrutiny and delays in reviewing their applications for tax-exempt status as “social welfare” organizations, though liberal-leaning groups were examined as well, investigations showed.

The assaults and especially the funding cuts have reached a point that the agency’s defenders are speaking out.

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April 22, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Thursday, April 21, 2016

The IRS Scandal, Day 1078

IRS Logo 2The Daily Signal, Jason Chaffetz Wants to Use ‘Atrophied’ Muscle of Impeachment Against IRS Commissioner:

The chairman of the House Oversight and Government Reform Committee wants Congress to impeach wayward government agents more often, and he’d like GOP leadership to start with Commissioner of Internal Revenue John Koskinen.

In an interview with The Daily Signal, Rep. Jason Chaffetz, R-Utah, likened impeachment “to a muscle that has atrophied over time,” and said he wants to “Get that muscle working again—this should be a common occurrence, this shouldn’t be once in a century.”

Chaffetz believes impeachment is within Congress’ Constitutional authority. “This was the safety valve,” he explained, “for somebody who’s not serving the best interest of the United States of America.”

Congress has only impeached

More recently Chaffetz has led the charge to impeach Koskinen, saying he obstructed the congressional investigation into the agency’s targeting of conservative groups. Chaffetz drew up impeachment articles for the taxman last October and directed his staff to hand deliver the papers to each member of Congress. Last year, the Treasury Department issued a statement backing Koskinen, saying that “Commissioner Koskinen is a man of the highest integrity with a steadfast commitment to public service during difficult times,” per the Associated Press.

But so far, House Speaker Paul Ryan, R-Wis., has hesitated to give Koskinen the boot. At a press conference last week, Ryan told reporters he’d rather wait until after the election to fire the top tax agent.

There’s always an election,” Chaffetz said, expressing frustration with Ryan’s decision to punt on the issue.

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April 21, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, April 20, 2016

The IRS Scandal, Day 1077

IRS Logo 2Townhall op-ed:  Dealing with the IRS Doesn’t Have to Be Hell, by Reps. Kevin McCarthy, Jason Smith, Rick Allen, Kristi Noem, David Rouzer & Glenn Grothman:

[H]ow do we plan to make the IRS more accountable? We have six bills we plan to pass next week.

The first will require the IRS to crack down on their employees who are delinquent on their own taxes. ...

Next, we will consider legislation that creates something that should already exist—a statutory rule blocking the IRS from rehiring employees who were already fired from the IRS for misconduct. ...

Following that, the House plans to pass a proposal that addresses the IRS’s shoddy customer service record in responding to requests for help in preparing tax forms. During some tax-filing seasons, the IRS only answers one in ten calls from taxpayers. This bill will ban IRS employees from getting bonus payments until the agency implements a plan to bring customer service performance levels up to what we expect of customer service in the private sector.

We also have a bill to prevent the IRS from keeping user fees they charge in a slush fund that is neither transparent nor accountable. ...

Lastly, we will be passing two bills that we expect to have wide bipartisan support: the first to stop any IRS funding from being used to target citizens for exercising their First Amendment rights, and the next to provide printed copies whenever requested of the official IRS instructions book on how to file taxes, ensuring those with limited or no Internet access still have everything they need to deal with April 15th.

In the week following Tax Day, House Republicans will send a clear message to the IRS: clean up your act, because this is only the beginning. Accountability isn’t an option in government; it’s a necessity. Only with a thoroughly reformed IRS and eventually a simplified and fair tax code can taxpayers again trust that the government is not only working efficiently, but is working for them.

Then, while we can’t promise that paying taxes will be a good experience, at the very least it won’t feel like being stuck in hell.

Office of Management and Budget, Statement of Administration Policy (Apr. 18, 2016):

The Administration opposes H.R. 1206, the No Hires for the Delinquent IRS Act; H.R. 4890, the IRS Bonuses Tied to Measurable Metrics Act; and H.R. 3724, the Ensuring Integrity in the IRS Workforce Act of 2015. These bills would impose unnecessary constraints on the Internal Revenue Service's (IRS) operations without improving the agency's ability to administer the tax code and serve taxpayers.

H.R. 1206 would prohibit the IRS from hiring any new employees until the Secretary of the Treasury certifies that no IRS employee has a seriously delinquent debt, or provides a report to the Congress that includes an explanation of why certification is not possible and what would be required to provide such a certification. The bill could result in the IRS being prohibited from hiring any new employees for any purpose -- a drastic and counterproductive step that would compromise tax administration and taxpayer services. The bill is also unworkable in operation, as "seriously delinquent" debts could be as low as $1 and tax liens are recorded on a case-by-case basis. This legislation is unnecessary, as strong laws and procedures already exist to ensure that IRS employees comply with their tax obligations. Publicly-available data show that IRS employees are among the most tax compliant groups in the Nation with a delinquency rate of less than 1 percent.

H.R. 4890 would ban performance awards to IRS employees until the Secretary of the Treasury develops and implements a comprehensive customer service strategy. This bill is unnecessary, as the IRS has already developed and has begun to execute a strategy to improve taxpayer services. The real constraint on the IRS's ability to serve taxpayers effectively is severe underfunding, including for taxpayer services. IRS funding is more than $900 million below its 2010 level, before adjusting for inflation. These budget cuts have impeded the IRS's ability to serve taxpayers, including inadequate responses to taxpayer calls and correspondence. Filing season statistics show that taxpayer service has improved this year as a result of a small funding increase provided last year, but more resources are needed to serve all taxpayers effectively and efficiently. Legislation constraining the IRS's ability to retain and recruit highly qualified employees is not needed and could be counterproductive to the Service's mission.

H.R. 3724 would prohibit the IRS from rehiring any employee who was involuntarily separated due to misconduct. The bill as written could force the immediate termination of employees who had been terminated and rehired many years ago, even if their performance since rehiring has been blemish-free. The bill's prohibition is also unnecessary because current IRS processes already ensure the agency does not rehire former employees who had significant conduct or performance problems during prior employment with the agency.

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April 20, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, April 19, 2016

The IRS Scandal, Day 1076

IRS Logo 2The Blaze, White House Responds to House GOP Calls to Impeach IRS Commissioner:

President Barack Obama has full confidence in Internal Revenue Service Commissioner John Koskinen, even as House Republicans are calling for his impeachment over failing to comply with congressional subpoenas.

“Of course he does” have confidence in Koskinen, White House press secretary Josh Earnest told TheBlaze Monday.

Last week, a group of House Republicans went to the House floor to call for Koskinen’s impeachment. Last year, Republicans on the House Oversight and Government Reform Committee called for charges against the commissioner.

Republicans say Koskinen also failed to testify truthfully and failed to make congressional investigators aware evidence was missing as part of the probe into the IRS targeting of Tea Party and conservative groups — which first came to light in 2013.

Still, Earnest scoffed at the notion of impeachment: “It is ridiculous for Republicans in Congress who seek to gut funding for the IRS, in some cases they call for the outright abolition of the agency, to be a fair arbiter of the effectiveness of the IRS commissioner.”

“The fact is, Mr. Koskinen has an extraordinarily difficult job, and it’s made only more difficult because Republicans seek to cut the funding of the agency,” Earnest continued. “He is someone who undertakes that work with a lot of professionalism and seriousness of purpose, and he deserves our gratitude.”

Breitbart, White House: Republican Calls For IRS Commissioner To Resign ‘Ridiculous’

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April 19, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Monday, April 18, 2016

FiveThirtyEight:  Everyone Files Their Taxes At The Last Minute

538 (2015)FiveThirtyEight, Everyone Files Their Taxes At The Last Minute:

Americans are a nation of procrastinators. Our tax returns prove it.

Last year, 21.5 million Americans waited until the last minute – or at least the last week – to submit their tax returns. That’s roughly one in seven filers, according to data from the Internal Revenue Service.

538-2

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April 18, 2016 in IRS News, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1075

IRS Logo 2Utah Policy, Ryan, Chaffetz Part Ways over Impeachment of IRS Chief:

Reps. Paul Ryan and Jason Chaffetz both believe IRS Commissioner John Koskinen should be fired, but they disagree about the timing. Chaffetz wants to remove Koskinen now, while Ryan says the GOP must win the White House first.

Reports Roll Call:

Oversight Committee Chairman Jason Chaffetz, R-Utah, with support from a majority of Republicans on his panel, introduced a resolution in October to impeach Koskinen. “The framers [of the Constitution] gave us a safety valve to get rid of somebody who is not serving the best interest of the nation and clearly John Koskinen is not,” Chaffetz said in a brief interview Thursday. “His record is clear and he should be removed from office.”

The resolution argues that Koskinen failed to comply with a subpoena requesting certain IRS documents and that he provided false and misleading information to Congress about missing emails sent to and from former IRS official Lois Lerner, a lead figure in the targeting scandal. The Judiciary Committee, which has jurisdiction over impeachments, has not acted on the resolution.

Lerner, the former head of the IRS tax-exempt organizations division, retired from the agency in September 2013. She had been on administrative leave since May 2013 after she revealed during a tax conference that the agency had inappropriately used political terms like “Tea Party” to filter tax-exemption applications for extra scrutiny.

The IRS has said it disputes the resolution's allegations and that it has cooperated with congressional investigations.

Chaffetz said he is working to build broad support for his resolution, which currently has 62 Republican co-sponsors. “It hasn’t been done in 140 years to impeach a civil officer,” Chaffetz said when asked about resistance from colleagues to support the effort. “But we think we’re on firm ground. It is in the Constitution.”

As to Ryan’s idea of waiting for Republicans to win the White House, Chaffetz said, “That’s one path, but I want the bureaucracy to know that if they do something as reprehensible as destroying documents there is an action that Congress can take.”

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April 18, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Sunday, April 17, 2016

The IRS Scandal, Day 1074

IRS Logo 2Investor's Business Daily editorial, Storming The IRS Gates: An Occupy Movement Worth Supporting:

A federal judge says the IRS can’t be trusted. Well, he’s right. So when will people in this country finally rise up and force Washington to get rid of this awful agency?

Because a holiday called Emancipation Day was celebrated Friday in the capital district, Americans have a few extra days to file their taxes this year. But the IRS remains, as does its institutionalized abuse of taxpayers. There is no emancipation from the torment of taxation, nor the agents of its collection, on the horizon.

Americans need relief, however. Taxes eat away at our substance, and the IRS makes this all the more intolerable because it decided long ago to be a wedge of enmity between a growing federal government and an ostensibly free people. This strained relationship has deteriorated to the point that the IRS targeted for persecution groups and individuals that it doesn’t like. Organizations that identified as Tea Party and conservative were harassed to the point that some of the victims decided to sue.

It’s hard to be upbeat on April 15, even when tax filing day is delayed. Yet there is a scintilla of hope to be found when a federal official rightly characterizes the IRS as an institution whose word is of little value.

“It’s hard to find the IRS to be an agency we can trust,” Judge David B. Sentelle of the U.S. Court of Appeals for the D.C. Circuit, said Thursday during oral arguments in one of the lawsuits filed against the tax collector in the targeting scandal.

The Washington Times reported that during the hearing Sentelle “said there is strong evidence that the IRS violated the constitutional rights of the groups when it delayed their nonprofit status applications and asked inappropriate questions about their political beliefs.”

What’s more, there’s good reason to think that the mistreatment of Tea Party and right-of-center groups has never stopped.

This should deeply concern us all, even those who aren’t Tea Party supporters. The IRS is not a political arm of the government that’s free to be used to suppress to dissenters. It is merely a tax collector.

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April 17, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Saturday, April 16, 2016

Rebranding The IRS: 'Fueling America'

Bloomberg, Would You Like the IRS If It Looked Like This? We Invited Three Top Design Firms to Give the Tax Agency a New Public Face. Here Are Their Rebrands.

It's hard to think of a government agency as disliked as the IRS. In a recent poll, 12 percent of taxpayers said they liked Vladimir Putin better. Beyond the Internal Revenue Service itself, many Americans hate the whole idea of paying taxes. Twenty-seven percent of those polled said they would get an IRS tattoo if it meant a tax-free future. Eleven percent would clean the toilets at Chipotle.

And it's impossible to imagine the IRS ever changing its image.

Or is it?

We asked three leading global design and brand strategy firms—Base Design, Chermayeff & Geismar & Haviv, and Siegel+Gale—to do just that. Here's what they came up with.

My favorite:  The IRS: Fueling America:

Fueling

Another good one:

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April 16, 2016 in IRS News, Tax | Permalink | Comments (2)